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Disclaimer- this is an overview of homeowners insurance- your policy documents alone dictate what will and will not be covered. Always check with your agent and your policy documents to determine what coverages you do have.
Basically, Home insurance is a type of property insurance that covers your private residence, that is, your home. It is an insurance policy which can cover losses to your home, losses to your contents, loss of use, or loss of other personal possessions of the homeowner. It may also provide liability insurance for accidents that may happen at home. It might even cover some accidents which the homeowner causes. Your homeowner’s policy should be a multi-line insurance policy. What that means is that it should include both property insurance and liability coverage all in one payment. Your policy coverages are divided get into several categories. Coverage limits are typically provided as a percentage of the primary Coverage A, which is coverage for the main dwelling.So how does the company decide what is covered and what is not covered? Home insurance coverage is offered on a named perils and an open perils basis. The way this works is simple, if you have a named perils policy, only what the company lists as a covered risks is covered. If it isn’t listed, then it is not covered. If you have an open perils, most losses are covered unless they are specifically excluded.

So there are three forms for coverage, basic, broad, and special. Basic is the most usually the cheapest, but provides the least amount of coverage. Usually it only covers this list: fire, lighting, windstorm, or hail, explosion, smoke, vandalism, aircraft or vehicle collision, riot, or civil commotion, sinkhole collapse, and volcanic activity.

A second form is called a broad named perils form. This form covers six more perils, but again if the loss isn’t in the list, it isn’t covered. Usually it covers fire, lighting, windstorm, or hail, explosion, smoke, vandalism, aircraft or vehicle collision, riot, or civil commotion, sinkhole collapse, and volcanic activity, burglary, break-in damage, falling objects, weight of ice, and snow, freezing of plumbing, accidental water damage, artificially generated electricity.
The special coverage form is the usually the most expensive and robust of the three. If the peril is not specifically excluded, usually you will have coverage. Usually it covers ordinance of law, earthquake, flood, power failure, neglect, war, nuclear hazard, and intentional acts.The basis for the price of your homeowner policy will depend on what it would cost to replace your house and which additional endorsements or riders are attached to the policy. There are other factors that may come into play such as your credit and claims history. Major factors in price estimation include location, coverage, and the amount of insurance, which is based on the estimated cost to rebuild the home.Be careful because losses due to a flood or a war or termites are excluded from coverage. You can buy insurance to cover a flood. Make sure you get enough insurance coverage because if you do not, you might have to pay a coinsurance penalty. In other words, if the value of your house is more than the coverage that you purchased, you may not have enough insurance, and the company will make you pay a penalty. They won’t give you the full amount to replace your house or whatever was damaged.
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